Berenberg is targeting a nearly 20% slide for one retailer
Wedbush downgraded Abercrombie & Fitch Co. (NYSE:ANF) to "underperform" from "neutral," saying the retail stock is priced to "perfection." The brokerage firm also said it expects "measured guidance" when the clothing retailer reports earnings ahead of the open on Wednesday, May 29, as "data shows a sharp increase in discounting as the driver of revenues at quarter end."
Analysts are overwhelmingly skeptical of ANF stock, with all 11 in coverage maintaining a "hold" or worse rating, and the average 12-month price target docked below current levels at $24.50. Options traders are bearish, too, per the equity's 10-day put/call volume ratio of 2.59 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks in the 89th annual percentile, meaning puts have been bought to open over calls at a faster-than-usual clip.
What's surprising is to see so much pessimism priced into a stock that was up 45.7% year-to-date through last night's close at $29.21. Plus, ANF stock hit a three-year high of $30.63 last Friday, May 3. The shares have since consolidated some of these gains -- down 2.81% today at $28.41 -- to test support at the rising 20-day moving average, which contained a late-April pullback, as well.
Berenberg slapped Wayfair Inc (NASDAQ:W) with a new "sell" rating and $121 price target this morning -- an 18.7% discount to last night's close at $148.87. The brokerage firm said the company is "over-investing in logistics" to compete with big names like Amazon (AMZN), Home Depot (HD), and Walmart (WMT), and "these risks are not fully priced in."
This skepticism echoes the broader trend seen among the brokerage bunch, with 14 of 22 analysts carrying "hold" or "strong sell" ratings on the stock. Meanwhile, Wayfair remains heavily shorted, even with these bearish bets down 11.4% in the two most recent reporting periods. Still, 8.9 million W shares are sold short, representing 22.6% of the security's available float.
On the charts, W stock was boasting a 65.3% year-to-date lead heading into today's trading. The shares have pulled back from their March 21 record high of $173.71. This level is in focus again this morning, with Wayfair shares last seen off 2.16% to trade at $145.69.